Why it’s important to segment customers
The days of “one-size-fits-all” marketing are over. Nowadays, irrelevance can cost nearly half of your customer base: 45% of consumers say one unpersonalized experience is grounds for them to switch to a competitor.
Customer segmentation lays the groundwork for sending the right message, to the right user, at the right time. It allows businesses to understand the needs and motivations of customers on a deeper level, to not only provide a superior experience, but to launch more impactful and cost-effective campaigns (e.g. better targeting ad campaigns to decrease cost-per-acquisition).
Types of customer segmentation
There are a variety of ways to segment your customers, but the four most common categories include demographic, psychographic, geographic, and behavioral, as we explain below.
Demographic segmentation is when customers are categorized by certain socioeconomic factors, like:
Psychographic segmentation looks at the attributes and characteristics that form our personalities. A common example is buyer personas, which create fictional backstories about potential customers (combining demographic data, like job title, with more psychographic data like motivations, preferred method of communication, and so on). Examples of psychographic segmentation include:
A person’s interests
Geographic segmentation is when consumers are organized into groups based on their location. This could be as broad as a region (e.g. North America) or a specific city (e.g. New York City). Geographic segmentation can be done by:
Behavioral segmentation separates customers based on the actions they’ve taken, providing insight into how a person chooses to engage with your business. Examples of the different criteria that can be used for behavioral segmentation include:
Requesting a demo
Items that were added to cart
Completing a purchase